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Why Is Tesoro Stock on a Roller Coaster Ride?

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Dec. 4 2020, Updated 10:53 a.m. ET

Volatility in refining stocks

In 2015, the US refining industry reaped the benefit of strong refining margins. You can see this in the stock performance of refining companies. However, since December 2015, refining stocks have been on a roller coaster ride.

In December 2015, refining stocks fell with news that the United States had lifted its 40-year ban on crude oil exports. This raised fears of a fall in refining margins for US refineries. Swelling inventory levels of refined products coupled with narrowing cracks put further pressure on refining stocks.

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Refining stocks’ downward journey halted in February 2016, and refining cracks started strengthening. Refining margin indicators of major refining companies showed improvements. However, since April 2016, cracks have shown a mixed trend with some areas showing weakness and some remaining flat. This has again likely put pressure on refining stocks.

Tesoro’s stock performance and moving averages

Tesoro (TSO) stock, continuing its 2015 downtrend, had a weak opening to 2016. TSO traded below its 50-day moving average but above its 200-day moving average. However, due to improving cracks, TSO started rising in February 2016. From February 18, 2016, to March 22, 2016, TSO stock rose by 33%. Tesoro (TSO) stock crossed over its 50-day moving average in this period. However, since March 22, 2016, Tesoro stock has fallen 17%, trending in line with its peers.

During the same period, Valero Energy (VLO) and PBF Energy (PBF) fell by 15% and 12%, respectively. Western Refining (WNR) fell even more by 30%. For exposure to refining sector stocks, you can consider the Vanguard Energy ETF (VDE). The ETF has ~10% exposure to the sector.

Currently, TSO trades below its 50-day and 200-day moving averages.

In the next part of our series, we’ll take a look at Tesoro’s analyst ratings and why most analysts are recommending a “hold.”

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